Rentals
Renting is an agreement where a payment is made for the temporary use
of a good or property owned by another person or company. The owner of the property
may be referred to as the lessor and the party paying to use the property as the lessee or renter. There is typically an implied, explicit, or written
rental agreement or contract involved to specify the terms of the rental,
which are regulated and managed under contract law. Examples include:
Renting real estate (real property) for the purpose of
housing
tenure (where the lessee rents a
residence to live in), parking space for a vehicle(s),
storage space, whole or portions of properties for business, agricultural, institutional, or
government use, or other reasons.
When renting real estate, the person(s) or party who lives in or occupies the
real estate is often
called a tenant, paying rent to the owner of the
property, the leasor, often called a landlord (or landlady). The real estate rented may be all or
part of almost any real estate, such as an apartment,
house, building, business office(s) or suite, land, farm, or merely an
inside or outside space to park a vehicle, or store things all under real estate law.
The rental agreement for real estate is often called a lease, and usually involves specific property
rights in real property, as opposed to chattels.
The time use of a chattel or other so called "personal property" is covered under general contract law, but the term lease also nowadays extends to long
term rental contracts of more expensive non-Real properties such as an automobiles, boats, planes, office
equipment and so forth. The distinction in that
case is long term versus short term rentals.
Some non-real properties commonly available for rent or lease are:
- The renting of motion pictures on VHS or DVD, of audio CDs, of computer programs on CD-ROM.
- Renting transport equipment, such as an automobile, boat, or a bicycle.
- Renting somewhat specialized tools, such as a chainsaw, laptop, IT equipment or something more substantial, such as a forklift.
- Renting a deckchair or beach chair and umbrella.
- Furniture
In various degrees, renting can involve buying services for various amounts of time, such as staying
in a hotel, using a computer in an Internet cafe,
or riding in a taxicab (some forms of English use the term "hiring" for this activity).
Reasons for renting
There are many possible reasons for renting instead of buying, for example:
- In many jurisdictions (including India, Spain, Australia, and the United States) rent used in a trade or business is tax deductible. Whereas Rent o
n a dwelling is not tax deductible, in most jurisdictions.
- Financial inadequacy, such as renting a house when one is unable to buy it. One may not wish to pay the
full price that ownership would need, allowing for smaller payments over a specified period of time.
- Reducing financial risk due to depreciation and transaction costs, especially for real estate which might be needed only for a short amount of time.
- When something is needed only temporarily, as in the case of a special tool, a truck or a skip.
- When something is needed that may or may not be already owned but is not in proximity for use, such as
renting an automobile or bicycle when away
on a trip.
- Needing a cheaper alternative to buying, such as renting a movie: a person is unwilling to pay the full
price for a movie, so they rent it for
a lesser price, but give up the chance to view it again later.
- The renter may want to leave the burden of upkeep of the property (mowing the lawn, shoveling snow, etc.) to the owner or his agents.
- There is no need to worry about lifespan and maintenance.
- Renting keeps off-balance-sheet the debt that would burden the balance sheet of a company in case
the property would have been bought.
Some merchants have rent-to-own (also called lease-purchase or hire purchase) programs, usually for expensive items such as houses or appliances.
Houses however are more commonly sold using a mortgage rather than hire purchase, the difference being who the house legally belongs to during the
payment period: the seller in the former case, and the buyer in the latter.
As seen from the examples, some rented goods are used on the spot, but usually they are taken along; to help guarantee that they are brought
back, one or more of the following applies:
- one shows an identity document
- one signs a contract (or Rental Agreement); any damage already present when renting may be noted down to avoid that
the renter is blamed for it when the good is returned
- one pays a damage deposit (a refundable fee that may be used in part to pay for damage caused by the renter)
Sometimes the risk that the good is kept is reduced by it being a special model or having signs on it than can not easily be removed, making it
obvious that it is owned by the rental company; this is especially effective for goods used in public
places, but even when used at home it may help due to social control.
Persons and businesses that regularly rent goods from a particular company generally have an account with that company, which reduces the
administrative procedure (transaction costs) on each occasion.
Signing out books from a library could be considered renting when there is a fee per book. However the
term lending is more common.
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